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ECB Hansson: exit from asset buys is tied to economic recovery - report

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ECB Hansson: exit from asset buys is tied to economic recovery - report

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TALLINN (Reuters) – The European Central Bank’s exit from asset purchases is tied to the recovery of the euro zone economy but low rates and the bank’s oversized balance sheet will provide support for years to come, ECB policymaker Ardo Hansson told an Estonian newspaper. “As the exit from the asset buying programme is in line with the recovery of economic activity, everything is calm,” Hansson, who sits on the ECB’s rate-setting Governing Council said. “After the completion of the purchase of bonds, the reinvestment of bonds already bought will continue for some time; that is, when the earlier purchased bonds expire, new ones will be bought instead,” Hansson was quoted as saying in Estonian daily Aripaev on Wednesday. Hansson said that given the ECB’s asset buys for more than two years, the main support to the economy comes not from monthly bond purchases but the bank’s already large balance sheet. The ECB has bought more than 2 trillion euros worth of bonds, mostly government debt, in the past two and a half year, hoping to cut borrowing costs to revive investment, growth and ultimately inflation. The European Central Bank rate-setting Governing Council will next meet on September 7 and policymakers have pledged to decide this “autumn” whether to claw back stimulus at the start of next year.

(Reporting by David Mardiste; Editing by Balazs Koranyi)
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